Medrazo sued HNH on behalf of a putative class under the UCL
and CLRA for failure to comply with California law that required new
motorcycles to be sold only with a label disclosing the recommended retail
price and the dealer’s added charges.
After the court of appeals directed the class be certified, the trial
court granted HNH’s motion for judgment, finding that Medrazo failed to
establish that she, or any other class member, was injured by HNH's conduct. The court of appeals reversed as to the UCL,
but affirmed as to the CLRA because Medrazo failed to adequately address that
law in her appeal briefs.
Medrazo presented evidence that: when she bought a
motorcycle from HNH, there was no label attached; more than $2000 in dealer
charges were added to the cost of the motorcycle she bought; HNH as a matter of
consistent practice failed to attach labels to Suzuki and Yamaha motorcycles,
failed to attach labels to some Honda motorcycles, and didn’t include the
dealer charges on all the labels that were attached; and that HNH sold more
than 3000 motorcycles in the relevant period.
The court of appeals ordered certification despite the individual issues
(each Honda purchaser would have to establish that there was no tag attached to
the motorcycle she bought and/or the dealer added costs weren’t disclosed on
the tag, and restitution amounts might differ) because those were manageable
issues overwhelmed by the commonality of issues.
The evidence suggested that customers would at first only
hear the manufacturer’s suggested retail price, but if a customer wanted to
buy, a salesperson would negotiate the terms of sale. At that point, the
salesperson would complete a worksheet disclosing any dealer-added
charges.
As for Medrazo’s specific purchase, HNH produced the hanger
tag for the motorcycle she bought; given that HNH still had it, HNH’s witness
conceded that it probably hadn’t been attached to the motorcycle when she
bought it, and also it showed the MSRP but not the dealer-added charges. After the lawsuit was filed, HNH started
creating its own hanger tags, laminated them to keep them from being destroyed
or blown off, and had a salesperson look for and replace missing tags every
day.
The trial court accepted HNH’s argument that Medrazo wasn’t
injured because she was adequately informed of the dealer-added charges before
she entered into the purchase contract, failed to show that she was misled or
injured by HNH’s failure to comply with the law, and failed to establish the
amount of restitution allegedly owed to herself or any other class member.
The court of appeals ruled that the trial court had
incorrectly applied the law to the facts.
Medrazo wasn’t required to show actual reliance to be entitled to
restitution based on the “unlawful” prong of the UCL, and she showed economic
injury. To violate the UCL, it’s enough
that a practice is unlawful, even if not deceptive. An actual reliance requirement doesn’t apply
to UCL actions not based on a a fraud theory; the only requirement is that a
plaintiff must show lost money or property caused by the violation.
Medrazo’s evidence that there was no hanger tag and that she
wasn’t informed of the dealer-added charges or the total price of the
motorcycle until she was presented with the sales contract sufficed to
establish that she suffered a concrete, particularized, and actual invasion of
an interest legally protected by California law, which requires disclosure before a consumer makes the decision to
purchase a specific motorcycle. Her
economic injury was that she bought a motorcycle that HNH allegedly “was not
legally allowed to sell (or at least was not allowed to sell at the price for
which it was sold) because it failed to disclose the dealer-added charges on a
hanger tag attached to the motorcycle.”
This was enough to constitute lost money or property as a result of the
UCL violation, assuming there was in fact a violation of the disclosure law.
Likewise, Medrazo presented sufficient evidence of
restitution amounts; HNH refused to disclose certain information about class
members, citing privacy concerns. Thus,
when the trial court ruled that Medrazo was unable to show each class member’s
dealer-added charges at the time HNH moved for judgment, it erred. Medrazo
could show the amounts HNH charged for each type of motorcycle, and thus could
easily establish the amounts owed as restitution if there was a violation of
the law once HNH disclosed the necessary information.
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